To compute the extra shrinkage for farm stored corn, use a shrink factor of 1.25% percent. This reduction in bushels is a cost of storage. 2 corn weighs 56 lbs.), the removal of additional moisture for farm stored corn also reduces the number of bushels. Extra Shrinkageīecause grain is sold on a weight basis (No. The extra drying fuel and power costs required to remove the additional moisture are costs of corn storage. 2 corn sold at harvest can be 15-15.5% moisture, depending upon elevator policy. Many producers prefer to dry farm stored corn that they intend to store into the summer to about 13- 13.5% moisture. The cost of drying corn to a safe storage level is a cost of storing corn. If the grain is stored, the amount of interest foregone is a cost of storage. If the grain is sold, the proceeds can be invested in the business or placed in savings to earn an interest return. ![]() So, a cost of storing grain is the additional interest expense incurred.Įven if no money is borrowed, there is an interest cost of storing grain. However, if the grain is stored, the loan is not repaid and interest expense continues. So interest expense is reduced if the grain is sold at harvest. If a producer has a loan, the loan can be repaid with the proceeds from the sale of grain. An example is the interest cost of having money tied up in stored grain inventory. Storage charges vary among elevators, but usually are a fixed charge for the first few months with an additional charge for each additional month thereafter. However, if grain is stored commercially, the commercial storage charge should be included in the analysis because the charge is incurred only if grain is stored. Therefore, they do not affect the annual decision of whether or not to store grain. These costs are incurred whether grain is stored or sold from the field at harvest. If grain can be stored in existing farm storage facilities, the ownership costs (depreciation, return on investment, maintenance, insurance, etc.) of the farm storage facility are not included in the analysis of whether to store grain in a particular year. The cost components of storing grain versus selling at harvest are: However, maximum storage income results from selective rather than continuous use of storage facilities. ![]() The proper use of storage will increase a producer’s income. Storage facilities may also increase the rate at which harvesting can be completed by decreasing the time spent transporting and unloading grain. Storage enables the producer to use marketing tools that capture seasonal price increases and/or narrower basis levels following harvest. The availability of storage adds flexibility to a grain marketing program.
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